With many companies facing ongoing concern amidst the cost-of-living crisis, there is a growing trend towards businesses choosing to outsource their Human Resources function. So why are companies looking more towards outsourcing their HR function, and what aspects should you take into consideration when undertaking this for your business?
Reducing cost
Outsourcing your HR to a consultant can hugely reduce the costs of paying for a full or part time salary for an in-house HR resource. Businesses can look to set up a monthly retained fee (which will vary dependent on the level of support you require) or move to a ‘pay as you go’ approach to HR (where you pay for HR support only as and when you might need it).
Flexible resource
Business lifecycles and environmental factors will impact the business, leading to successes and more challenging periods for your business. Outsourcing your HR function gives you the ability to respond to these factors and vary the extent of HR support your business might need at any given time; whether that is increasing it or decreasing it. There is the added benefit that you do not need to go through lengthy and time-consuming hiring or redundancy processes (as you would for internal HR support), when your business needs change.
Accessing professional expertise
Outsourcing HR gives you the ability to select the best fitting consultant for your HR needs and your business. For example, you may want an experienced HR generalist that can pick up the everyday HR operations in your business. Alternatively, you may want more of a strategic expert to help improve elements of your HR infrastructure such as implementing reward programmes, improving retention or increasing staff engagement. Most HR consultancies will be able to offer your business a mixture of HR skills and experience to meet your needs.
Establishing peace of mind
Outsourcing your HR to an experienced external provider means that they can take care of as much or as little HR processes as you want, meaning HR becomes worry-free and leaving you free to focus on doing what you do best, running your business!
Kim’s top tips for outsourcing your HR function:
- Choose a HR consultancy that offers the right sort of support for your business size / HR needs – a micro business will probably benefit more from a pay as you go approach as their HR needs will typically be minimal compared to larger businesses. Therefore, only paying for HR as and when you need it could be a preferential approach. SMEs are more likely to benefit from set monthly fees (usually called ‘retainers’) as they may require several elements of HR support including HR advice for the management of people issues, HR documentation such as contracts and policies, and possibly a HR system for recording people data.
- Pick flexible HR consultants – a good consultancy will have a strong team of experienced HR professionals and will understand that the world of business is never static. Always thoroughly check the terms of your consultancy agreement. Some consultancies have long (3-5 year!) terms that you can’t vary. This is much too long and is inflexible for a business that may evolve during this timeframe. A good consultancy will offer variable services (can increase or decrease dependent on company growth) on shorter terms (1-2 years).
- Ensure you have a named account lead – a bespoke consultancy will have a dedicated account lead for your business. This will be the main contact who supports your business. Its critical for a HR consultancy to understand your business, your culture and your people, so that they can offer the right HR advice. Don’t use a HR consultancy that can’t guarantee you this as some well-known larger consultancies will just give you a contact number where you will speak to a different advisor each time who just doesn’t know your business well enough.
- Choose a ‘hands-on’ consultant – rather than just being there when you need it, a strong HR consultant will proactively contact you in advance of employment law changes or keeping you up to date with the latest HR developments (e.g. how to manage additional bank holidays). Check what supplementary support your HR consultant will offer including newsletters, check in calls and updates to policies/contracts with employment law changes.
At Nockolds HR we understand every business’ HR needs vary significantly. We offer both retained HR contracts and pay as you go HR services. We offer flexible terms with annual reviews to increase or decrease the level of HR support your business might need dependent on its circumstances. Speak to Kimberley Wallace, Senior HR Consultant for more information.
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